Better dairy know-how leads to better margins

Latest data from Promar’s Milkminder dairy costed herds report indicates that the top 20 per cent of producers by margin over purchased feed (MOPF) per cow, have increased their average herd size by five per cent.

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Nigel Davies of Promar.

This is in comparison to the average performers of the national sample, which have increased by two per cent.

This demonstrates that those businesses in the top 20 per cent have greater confidence to grow their enterprises.

While milk price received ultimately has a considerable bearing on MOPF, those herds in the top 20 per cent can also attribute significantly better margins to their greater technical ability.

Looking at 12 months absolute performance to May 2017, the MOPF for the top 20 per cent outstrips the average by £411 per cow per annum, equating to £41,100 per 100 cows.

Breaking this down further, £242 per cow stems from the fact that the top 20 per cent received a higher absolute milk price over the 12-month period compared to the average - a premium which has narrowed considerably in recent months.

Importantly however, the remaining £169 per cow, comes from achieving an improved technical performance compared to their peers irrespective of milk price received.

In physical terms, the top 20 per cent have sold 827 litres more for just an extra 212kgs of purchased feed per cow. This is the kind of superior performance that makes a difference to confidence.

Achieving this will have been about excellence at much more than just concentrate management. It will have involved a sustained focus on reproduction efficiency, cow health and a whole host of other factors, including the ambition of the herd owner and manager to be the best that they can be.

Producers should really drill down into their figures to understand where improvements can be made. Using an industry benchmarking service can also help to really highlight areas of focus for the greatest gains, and ultimately, give individuals the strength of confidence to progress and develop their farm businesses.

Nigel Davies is national consultancy manager with Promar, an agricultural and agri-food consultancy.